The United States acquired "rent-free" real estate in
Vietnam through the 1950 Agreement for Mutual Defense Assistance in
Indochina, or the Pentalateral Agreement, for Free World Military
Assistance Forces. Signatories to the agreement were the United
States, the Republic of Vietnam, France, Laos, and Cambodia. Although
Article IV of the agreement spelled out what real estate the United
States would be provided, as late as 1969 the U.S. Embassy's position
was not to push for full Vietnamese compliance, based on the belief
that the agreement as signed did not provide for, or envision,
operations occurring after 1965.

As a result of high-level diplomatic discussions in 1965, the
government of Vietnam did agree to assume responsibility for all land
acquisition, funding for payments, and relocations without directly
charging the United States. The cost would be covered by continued
American support of the deficit in the Vietnamese budget. The Interior
Ministerial Real Estate Committee (IMREC) was established to acquire
and provide American and other Free World military forces with
unimproved rent-free real estate. Tabulations of owners, amounts of
real estate affected by land acquisition, determination of the amounts
of indemnification, and actual payments were made by the Vietnamese
government without overt American participation.

General Westmoreland's staff became the agency for dealing with the
Vietnamese government in the acquisition of real estate for allied
armed forces in Vietnam. The Director of Construction was after 15
February 1966 responsible to the commander of Military Assistance
Command for the performance of these functions. The Navy and Air Force
component commanders at Military Assistance Command were directed by
General Westmoreland to co-ordinate real-estate functions and
activities of all allied forces within their areas of responsibility.

An Engineer Division of the MACV J-4 was organized during late April
1965, and a Real Estate Branch within this division came into being on
2 May 1965. The 64th Engineer Detachment (Terrain) was placed under
operational control of COMUSMACV, and

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its assets consisting of five officers and five enlisted men were
used to establish a Real Estate Branch within the Engineer Division.
On 15 February 1966, when the Construction Directorate was
established, this same real-estate organization was structured into
the directorate and continued discharging the responsibility for
co-ordinating all real-estate activities within Vietnam.

The Director of Construction, MACV, continued to receive all
requests for real estate, except lease requests, to support U.S. and
other Free World military forces and transmitted them to the
Vietnamese Joint General Staff, which returned them, approved or
disapproved, to the requesting component commanders through the MACV
staff. The Director of Construction allocated available real estate to
elements of allied military forces. He also maintained a central
inventory of all leased and rent-free real estate and was responsible
for returning Vietnamese-owned property to the government when it was
no longer required.

The various component commanders were given the responsibility of
co-ordinating real-estate transactions for base development in their
operational areas. The Commander, 7th Air Force, was responsible for
all air bases where the Air Force had the primary mission. The
Commander, Naval Forces, Vietnam, managed the I Corps area exclusive
of the bases assigned to the Air Force, and the Commanding General,
U.S. Army, Vietnam, managed II, III, and IV Corps except for Air Force
bases.

MACV followed, insofar as possible, the Pacific Army headquarters'
regulations for real-estate policy and procedures, which were
published in December of 1965. General Westmoreland, as Commanding
General, U.S. Army, Vietnam, made the commanding officer of the 1st
Logistical Command responsible for the acquisition, recording,
reporting, and disposal of real estate for those units assigned or
attached to U.S. Army, Vietnam. The USARV Engineer exercised staff
supervision for procedures governing real-estate leasing as carried
out by 1st Logistical Command. The 1st Logistical Command's
responsibility for real estate was continued until April 1968 when
Major General William T. Bradley, Commanding General, U.S. Army
Engineer Construction Agency, Vietnam (USAECAV), was delegated the
responsibility.

A Central Real Estate Office (CREO) was established in Saigon to
administer leases and act as the repository for master leases. Area
real estate offices (AREO's) were established in U.S. Army Support
Command logistics areas. Area offices were located in Qui Nhon, Nha
Trang, Vung Tau, and Can Tho. Two more offices were set up in Saigon,
and one of these was responsible solely for the Headquarters Area
Command (the greater Saigon area). Customer con-

[30]

tact, whether for rent-free or leased property, was made with the
AREO. The area real estate office processed land-use requests and
negotiated leases only when authorized by the Central Real Estate
Office.

Pacific Army headquarters delegated acquisition approval authority
to the Commanding General, USARV, for leasing real estate when the
contract was renewable annually and the total annual rental did not
exceed $300,000. This authority was redelegated to the 1st Logistical
Command and later to the Commanding General, U.S. Army Construction
Agency, Vietnam, when he assumed the real-estate mission. The chief of
the Real Estate Division at CREO and later at USAECAV headquarters at
Long Binh, became a contracting officer for real-estate matters with a
$100,000 contract authority, since about 90 percent of the leases cost
less than $100,000 annually.

Augmented by an office staff of contract employees of the Pacific
Architects and Engineers, Inc. (PA&E), the Real Estate Division
also received, processed, and made utility payments which averaged
about $2 million annually. The division was also responsible for
preparation and submission of the reports based on real property and
feeder information sent in from contract and military post engineer
organizations throughout Vietnam. These reports were the basis of the
real-estate inventories maintained at higher headquarters.

For a unit to acquire property a unique request system was operated.
The unit would initiate a Land-Use Request containing a description of
the property and justification for its acquisition. With the request a
note of concurrence or rejection was forwarded by the local government
official responsible for that area. These officials included province
chiefs, district chiefs, mayors of autonomous cities, and military
region, base, or unit commanders. The request was then forward to the
chairman of the Interior Ministerial Real Estate Committee by Military
Assistance Command. Written approval, or a Land-Use Concurrence, from
the Vietnamese provided MACV rent-free use of the property as long as
the requirement existed.

Occupation of real estate without Vietnamese approval created
several problems. Primarily the Vietnamese government could not
compensate land owners for appropriated land unless requests for land
were sent through proper channels. Unless a request went through MACV
to the Interior Ministerial Real Estate Committee, no funds were
transferred to the property owners.

In many instances, real estate was used and developed immediately
upon submission of the land-use request based on the con-

[31]

currence of a local Vietnamese official. Yet some of these requests
were never acted on by the government, which usually did not have
sufficient funds for indemnification. At other times action was
deferred because of political influence. Regardless of action, nearly
all the land requests stated that upon termination of use and
occupancy of the real estate, Military Assistance Command retained the
option of removing or abandoning in place any installation on it.
Vietnamese government approval further stipulated that when MACV no
longer had need of the real estate it would be returned to the
Vietnamese armed forces along with all improvements. This difference
was never negotiated, and real estate was acquired for air bases, base
camps, logistics complexes, and industrial sites for asphalt plants,
crushers, concrete plants, and administrative space; easements were
also acquired for utilities, roads, and communications cables. Each
land-use concurrence varied in size from single office locations to
bases like Chu Lai, which was 26 million square meters of cleared
land.

Initially it had been necessary to obtain concurrences for road
improvement projects and new road construction, but with the advent of
the MACV Lines of Communications (LOC) program, the Vietnamese
government assumed the responsibility of providing real estate for
jointly used roads. This took the component commanders out of the real
estate acquisition business at least for this program.

In support of tactical operations, land-clearing projects required
no real-estate action, nor was it necessary to transact for real
estate which was occupied during combat operations. Claims arising
from the use, occupancy, or damages during and after military
operations were handled by the U.S. Army, Vietnam, Foreign Claims
Division.

Although it had been stated that the Vietnamese government would
furnish rent-free the real estate required for support of allied
forces, this policy was generally applied only for requirements
outside urban areas. In urban areas, particularly for property that
was privately owned and already improved, extensive leasing was
necessary. At its' peak, the U.S. leasing program had an annual cost
of over $20 million.

Early MACV and USARV real-estate regulations touched the leasing
aspects of the program only lightly. When it became apparent that
significant real-estate requirements had to be satisfied by leasing,
regulations were published to cover the program. For acquisition of
rent-free properties, the Vietnamese government dealt with Vietnamese
owners; for acquisition of leased properties, U.S. military personnel
negotiated with Vietnamese owners.

The necessity of responding to immediate needs for facilities,

[32]

that is, warehousing or hotels for
billets, created a sellers market. Unfortunately, there was an acute
shortage of military personnel trained in the negotiation of leases.
Nevertheless, what the military negotiators lacked in sophistication,
they made up for in enthusiasm and responsiveness.

Because the situation was urgent, lengthy negotiations could not be
conducted, and a highly undesirable condition was aggravated by other
critical factors. In many areas, the number of facilities available or
usable was extremely limited. Vietnamese standards of living, hence
construction standards, were very different from U.S. standards, and
American textbooks, manuals, and Army regulations took little
cognizance of these differences. Physical security was always in
question, and how to deal with the Vietnamese landlords and many other
enterprising entrepreneurs not disinclined to take advantage of their
tenants was always a problem.

This set of circumstances resulted in many hundreds of inadequately
researched, poorly written, expensive, and badly documented leases.
Yet, the results must be examined in context and should not be
seriously criticized. It was remarkable that in spite of the many
frustrating problems faced, real-estate personnel met needs in a
timely manner.

The management of real property, once acquired, necessarily varied
depending on the area, the situation, the commander, and the type of
properties involved. In addition to rent-free properties, there were
at one time over 900 leased properties recorded. They varied in size
from large hotels to small individual villas and other facilities like
cold storage spaces, warehouses, shops, and piers.

The Real Estate Division was extremely limited in its ability to
manage real estate. Local commanders had to assume the burden of the
task, and so real management became the direct responsibility of the
installation co-ordinator, who was usually the senior officer in an
area or at an installation. Installation co-ordinator positions were
designated by the Commanding General, USARV, as responsible for seeing
to the proper use and maintenance of all real estate at an
installation. The Real Estate Division did administratively manage all
leases and, within its resources, checked all properties, but
management of real-estate holdings was made unusually difficult for a
number of reasons. There was a great dispersion of property even
within the areas serviced by any one area real-estate office. There
was difficulty in traveling to properties. There was a lack of
properly trained real-estate personnel. And operations were taking
place in an inflationary economy. The inadequate local post engineer
system was not able to maintain real property records. Requirements to
follow Army regulations mainly directed at continental

[33]

U.S. (CONUS) real-estate activities and not modified for combat zone
operations were in effect. Poor documentation and inventories resulted
from an urgency in acquiring real estate during the buildup. Changes
in personnel which occurred because of the twelve-month tour did not
contribute to continuity of information. There was a very serious lack
of property accountability. As time went on, the Real Estate Division
began a review to try to put everything in order. Under the Engineer
Construction Agency, the pieces were finally fairly well put together.

The agency instituted many improvement programs. A special title
search program was started to document all properties. Many leases had
been signed with persons who had not been required to prove ownership.
Some properties were found to be government-owned, hence their leases
were terminated and the properties used on a rent-free basis. Other
contracts were terminated with lessors who could not produce a title.

Many leases had annual advance payment clauses, and this meant that
when they were terminated the Army lost money. There was no procedure
by which the United States could bring suit against the Vietnamese
lessor for return of advance payments. An intense program was begun,
however, to recoup advance payments, and it was amazingly successful
considering the Real Estate Division had to rely on persuasion rather
than law. Some agreements were signed in which the Army agreed to
accept repayment from lessors on an installment plan. One such
agreement extended over seven years.

Action was taken to renegotiate lease holdings on property for which
there was a continued requirement and to reduce advance annual
payments to quarterly payments. To keep the status of the changing
real-estate picture up to date, to be able to terminate leases, to
make payments on a more timely basis, and to increase identification
and documentation of real-estate holdings, a program was developed
making maximum use of automated data processing. Monthly print-outs
were a valuable tool at all levels.

Dual leases, or the issuing of two leases for the same piece of real
estate, one for the structure and one for the furnishings, were also a
problem. The Vietnamese lessor wanted to use dual leases quite simply
as a tax dodge. Although in most cases the combined price of the two
leases was a fair market price for the property, it required twice as
much administrative effort, the legality was highly suspect, and we
indirectly contributed to the lessor's tax evasion. In cases where
furnished facilities continued to be required, the contract was
renegotiated in a single lease. In facilities where furnishings were
no longer needed, leases were terminated at savings to the American
taxpayer.

[34]

Property accountability was finally improved by transferring
responsibility for maintaining the real property record cards from the
Real Estate Division to the installation post engineer office. It was
then the installation co-ordinator's responsibility to receipt
property to the user. A Real Estate Division Utilization Branch was
established to inspect leased properties and ensure their proper use.
A standard lease form was developed and put into use. A series of
standard operating procedures were published and distributed to
explain fully real-estate operations in Vietnam. Last, a training
program for military personnel was initiated in conjunction with the
Office of the Chief of Engineers. Officers selected for real-estate
assignments in Vietnam went to the Chief of Engineers' office in
Washington, D.C., en route to Vietnam for three days of briefing and
study. In Vietnam they were usually assigned to one of the branches in
Real Estate Division headquarters for one or two months before going
to an area office to become the point of customer contact.

In addition to the unusual conditions and unique real-estate aspects
involved, there were other special problems. Acquisitions of real
estate on which there were gravesites caused serious complications.
Although relocation of the graves was a Vietnamese government
responsibility, finding descendants was often difficult and relocation
slow. Some construction was delayed for extended periods because of
gravesites in the construction area. All real-estate actions were
guided and influenced by the political and private considerations of
the parties involved as well as by military requirements.

Our last problem was one of co-ordination. Although the U.S. Embassy
rental ceilings established in 1965 were supposedly applicable to all
U.S. personnel and agencies in Vietnam, it appeared that only the U.S.
military seriously endeavored to comply. Many agencies had a great
deal of autonomy and seemed to pay little attention to embassy policy,
especially in areas where properties were scarce. Later, between 1968
and 1969, the embassy became more active in controlling interagency
competition and developed a working real-estate committee on which
most agencies were represented.

There were a number of lessons learned as a result of our real
estate
venture in Vietnam. Certainly the absence of a working, enforceable
country-to-country agreement for supplying all real estate on a
rent-free basis delayed base development in some instances and
resulted in a cumbersome leasing program. Furthermore, our
surprisingly rapid buildup combined with a lack of appreciation on
some commanders' parts for their responsibilities made it very
difficult to predict new or manage old locations accurately. This
condition was further aggravated by the paucity of

[35]

experienced real-estate personnel, the use of CONUS-oriented
regulations, and the understandable reluctance of units to give up
leased civilian facilities.

To prevent similar problems in future operations, a single
headquarters should be responsible for all real transactions from the
start. Specially trained teams must be available to augment planning,
and country-to-country agreements must be in effect sometime before
the initiation of troop movements.